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Govt Mulls Initiating Regulatory Action Against Local Automakers

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The super-frequent increase in prices of local assembled cars has finally irked the government. The auto industry regulator Engineering Development Board (EDB) has sent a notice to auto assemblers, asking them to share their cost structure, and justify price increase in a meeting scheduled to take place on 10th May 2022.

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In a notice sent to the auto assemblers, Asim Ayaz, EDB’s General Manager Policy wrote:

“The government is extremely concerned and has taken a very serious view about the frequent price increases by local automobile assemblers. This situation is clearly unacceptable, and the government may consider initiating regulatory measures, which may include fixation of prices under the Price Control Prevention of Profiteering and Hoarding Act, 1977. You are therefore directed to share your cost structure and provide/ justification for recent price increases by 7th May, 2022. You are also further directed to ensure your presence in the subject meeting on 10th May, 2022 in the Committee Room of EDB.”

The letter has been sent to major automakers including Indus Motor Company (IMC), Honda Atlas, Pak Suzuki Motor Company, Lucky Motor Corporation, Al Haj Automotive, United Motors, Regal Automobile Industries, Master Changan Motors, Hyundai Nishat Motor and Sazgar Engineering Works.

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This isn’t the first time that auto assemblers have been asked to justify the frequent price increase. Last year, the Ministry of Industries and Production also sent similar notice to assemblers asking to provide justification for raising car prices & to provide their costing structures failing which, price fixation proceedings would need to be carried out unilaterally. The letter added that the government might have no recourse but to initiate regulatory measures, which include fixation of prices under the Price Control and Prevention of Profiteering and Hoarding Act, 1977.

Related: PAMA Says Government Cannot Fix Car Prices

Responding to this, the CEO of IMC Ali Asghar Jamali said they will meet and explain to EDB the reasons behind price increase, however, Jamali said that auto assemblers would not be sharing their cost structures as it was classified information. According to Ali Asad Hameed, the CEO of Sazgar Engineering Works its not just the USD hike, the raw material prices are also increasing which is forcing our principles to increase prices, though USD is one of the biggest factors.

It is pertinent to mention that car prices are now being revised after an interval of just 35 days with 3 major price revisions announced within a span of just 4 months since the beginning of 2022. Almost a 20% price increase has already been witnessed so far in year 2022.

Source: The News

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